My Smith has a total of 8 kids, in explaining, each daughter has a total of 4 brothers which are the same brothers, thus the 4 daughters +4 brothers = a total of eight people. Each daughter can claim to have 4 brothers of hers as well as the other one thus they are eight in total.
Mr Smith does not have any children. From the statement, Mr Smith “ had” daughters and the daughters had sisters. The question is focusing on the current moment through the use of “ have” and we have not been provided statistics of the current number of children Mr Smith has.